The government put the $765 million loan on hold after "allegations of wrongdoing" on the company's part jeopardized its federally funded move into pharmaceuticals, the U.S. International Development Finance Corporation (DFC) said in a terse tweet Friday.
Shares of the company were down 39.50% at US$9 in pre-market trading on Monday.
It was announced July 28 that Kodak would receive a $765 million federal loan to aid the U.S.in reducing its reliance on other countries for ingredients used in generic drugs. TV stations in Kodak's hometown of Rochester, New York, reported the deal a day before the official announcement.
Lawmakers said they had "serious concerns" about the transactions and asked the Securities and Exchange Commission to investigate the circumstances surrounding the matter.
"We will not proceed any further unless these allegations are cleared", she said at a regular briefing, adding that the investigation was still underway.
After the announcement, Kodak stock leaped as much as 350%. Now, with investigations mounting, the U.S.is pumping the brakes.
On July 28, Donald Trump announced Kodak would receive a $765 million federal loan to produce ingredients to make pharmaceuticals in the USA as part of an effort to reduce the nation's reliance on other countries for generic drugs.
'We will bring back our jobs and we will make America the world's premier medical manufacturer and supplier'. The regulator is also looking into stock awards granted by Kodak. Kodak shares have surged to as high as $33.20 from $2.10 before news of the loan leaked.
"Given that the administration admitted there are "serious concerns" with the loan and said they "will not proceed any further unless these allegations are cleared, ' I expect both the administration and the company will fully comply with the committees" document requests without delay", he said. It was meant to speed production of drugs in short supply and those considered critical to treat Covid-19.